Page:Harvard Law Review Volume 32.djvu/528

492 492 HARVARD LAW REVIEW of a "Welsh Mortgage" or the "vivium vadium" of Lord Coke;*' but that does not affect a comparison with the EngUsh procedure of "arrangements." The public utiUty, under a debenture, to use the often-quoted phrase of the English courts, is viewed "as a fruit-bearing tree, the produce of which is the fund dedicated by the contract to secure and pay the debt;"^^ or, as the English courts also state it, the "living and going concern thus created by the Legislature must not, under a contract pledging it, as security, be destroyed, broken up, or annihilated." *^ In brief, a debenture holder cannot destroy the usefulness of the property to the public in order to get payment of his obligation. This same rule applies in America. A public utility is charged with an obligation to the public; its property is dedicated to the public use, and the owner thereof, or the holder of any lien thereon, cannot so change the nature or condition of the property as to interfere with the public's rights.*^ Thus in substance there is no difference between an American bond or an English debenture, and the situation in each case during reorganization is comparable. The method of "Arrangements" in force in England, thus recognizes the two fundamental necessities of all reorganizations: first, a means of forcing the minority to abide by a plan of reor- ganization acceptable to the majority; second, a method of de- 1" See 4 Kent. Com., 6 ed., 137. " Lord Cairns in Gardner v. London, Chatham & Dover Ry, Co., L. R. 2 Ch. App. Gas. 201, 217 (1867). See also Marshall v. South Staffordshire, etc. Co., [1895] L. R. 2 Ch. D. 36. ^ Gardner v. London, Chatham & Dover Ry. Co., supra. " Munn V. Illinois, 94 U. S. 113, p. 126 (1876). The question as to whether or not one voluntarily engaging in a public service can voluntarily withdraw on due notice to the public is not entirely settled in America. In Munn v. lUinois at page 126 this right to withdraw was recognized; see also Weems Steamboat Co. v. Peoples Co., 214 U. S. 345, 356 (1909). Yet, as a practical question, a utility, needed by the public will not be allowed to cease serving the public, and this rule now insisted upon by State Regulatory Bodies probably will be finally accepted by the courts. Moreover, a utility must give adequate service; a partial withdrawal resulting in inadequate service or a temporary cessation of service will not be allowed. San Antonio St. Ry. Co. V. Texas, 90 Tex. 520, 39 S. W. 926 (1897). The pubUc has an established right in every reorganization, Central Trust Co. v. Missouri K. & T. Ry. Co., 246 Fed. 154, 156 (1917); and, even assuming that the bondholders could acquire the ownership of a property and completely terminate its continuance in the public serv- ice, yet they could not by reason of their position as creditors or owners, impair its usefulness so long as it continued in the public service. Thus the powers and security of holders of American public utility bonds is actually no greater than that of holders of English debentures despite frequent assertions to the contrary.